Understanding the Dodd-Frank Living Will Requirements

The Dodd-Frank Act living will requirements are among the most significant aspects of the new law designed to get at the issue of containing the systemic risks posed by large bank holding companies and nonbank financial firms.

In effect, the living will is exactly as described - a self-designed plan by a systemically significant firm to conduct a rapid and orderly wind down of its affairs in the event it encounters financial stress. Unclear, however, is whether the requirements of the recently issued Federal Reserve and FDIC rules will serve to contain systemic risk or expose firm weaknesses in a manner that could compromise and expose their operations to the scrutiny of direct competitors. Also difficult to discern is the process of identifying significant interconnectedness among large bank holding companies and nonbank financial firms and isolating the systemic risks posed by one entity to that of numerous other systemically significant firms and systemically critical markets. The OnDemand Webinar will explore both the legal and policy implications of Section 165(d) of the Dodd-Frank Act and provide an understanding of the broader goal and regulatory jurisdiction to identify, measure, and contain systemic risk. The program will explain the practical aspects of the living will process, as well as the challenges for institutions and regulators in implementing and satisfying the Congressional intent behind Section 165(d). The OnDemand Webinar will provide a working knowledge of the resolution plan process and requirements and address what the new law may mean for institutions not directly affected by the living will requirements.